Low Volume Post-Christmas Rally
The market opened higher yesterday, on the first day back from the Christmas holiday. The averages were slightly higher in the prior week, with the Dow making another new high.
Yesterday, the strength was in the Nasdaq, both the NDX 100 and the Nasdaq Composite. These indices have lagged the other major indices since the election, and are just now gaining parity. Both Nasdaq indexes made new intraday and closing highs, with investors going back into Tech issues, as some of the current hot sectors were becoming overbought.
The DJIA and SPX ended with little gains on the day, while the NDX had a moderate move to the upside. At the close, the DJIA added 11.2 points, the SPX inched up 5 points, and the NDX gaining 0.52%. Breadth was positive, 1.6 to 1, on weak (holiday) volume.
Technicals Remain Bullish As Nasdaq Gains Parity
ROC(10)’s were mixed, with the DJIA moving lower and the NDX and SPX advancing. All three averages remain in positive territory.
RSI’s were slightly higher and the DJIA remains the strongest at 77.7. The DJIA and SPX now see their MACD below signal, due to the recent sideways action. The NDX continues to see its MACD above signal.
The ARMS index ended the day at 0.62, a bullish reading, despite the fact that the DJIA and SPX ended near their lows of the session. The DJIA and SPX traded in a very narrow range, despite a Consumer Confidence number reported at its best since 2001.
The DJIA 20D-SMA sits at 19639, while the SPX 20D is at 2242. The DJIA continues to have critical near term support at 19500 and the SPX at 2187. The star of the session was the NDX, which closed at a new high of 4965 and hit a fresh intraday high of 4992. The NDX 20D-SMA is now at 4899.
The VIX diverged from equities making a move to the upside, adding 4.8% to 11.99. Near term support for the NDX is at 4962 and 4953. Near term resistance is at 4975 and 5000. Near term support for the SPX is at 2262 and 2250. Near term resistance is at 2271 and 2277.
Europe is mixed in early trade, while U.S. Futures are pointing slightly higher in the pre-market. In terms of economic data out today, we’ll see the Pending Home Sales numbers at 10:00am and the Crude Inventories data at 10:30am.
The PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ) rose $0.24 (+0.2%) in premarket trading Wednesday. Year-to-date, QQQ has gained 8.62%, versus a 12.14% rise in the benchmark S&P 500 index during the same period.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, David Chojnacki, does not endorse or recommend any issuer or security mentioned herein.
Dave Chojnacki is the Chief Market Technician at Street One Financial. He provides technical support for the Street One team and also develops individual analysis for Clients as requested.
Dave is a major contributor to the ‘ETF Daily’, a morning newsletter providing clients a daily look at market technicals of the major indices and selected ETF’s. Market trends, support and resistance levels are provided in the daily letter. The Technical portion of the daily can also be found on Seeking Alpha. Mr. Chojnacki has been quoted in a number of industry publications including the Reuters, ETF Trends, Minyanville, Yahoo Financial and Investors.Com.
In addition, Dave assists with desk trading when necessary. He possesses a Series 7 and 63.
Prior to joining Street One, Dave designed and developed I/T Systems for the Insurance and Financial Industries.